Shares of Polo Ralph Lauren Corp. (NYSE: RL) rose on Tuesday when a Goldman Sachs (NYSE: GS) analyst upgraded the stock to "Buy", according to Associated Press.
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The analyst also predicted earnings and sales growth on gains in southeast Asia.
Goldman Sachs analyst Adrianne Shapira said analysts are underestimating the company's potential. She said worldwide growth and buybacks will boost earnings per share above Wall Street expectations.
Polo Ralph Lauren shares rose $3.36, or 4.5 percent, to $77.59 in midday trading.
Shapira, who previously rated the stock "Hold," said Polo management has typically been conservative with its outlooks. Results have often topped Wall Street expectations by at least 48 percent on average over the last seven quarters, she said.
Shapira was also bullish on growth prospects in southeast Asia and expects a recovery in China.
The next catalyst will be the company's quarterly report in November. Shapira expects better-than-expected earnings.
In addition, Shapira predicted more diverse prices for handbags next fall, with prices between $1,000 and $15,000.
"They are one of the few luxury brands who have yet to fully capitalize on the accessory category, given the sizable and profitable $9 billion U.S. handbag market," Shapira wrote in a client note.
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